Acquisitions propel Well Health to record revenues, profits in 2021

a group of five people is meeting in a board room with the logo of the Well Health company on the wall
Well Health Posts adjusted gross profits of $153.7 million CAD for 2021

Fuelled by revenues from its acquisitions, Well Health announced record quarterly revenues for its fourth quarter of 2021. Well reported quarterly revenues of $115.7 million representing a 573 percent increase compared to the same period last year.

“We have added significant scale to our business and increased our leadership position as the prominent end-to-end healthcare company in Canada.”
– Hamed Shahbazi

Well also posted annual revenue of $302 million, an increase of 502 percent compared to the previous year. Profits were up as well. WELL achieved record adjusted gross profit of $153.7 million, representing 624 percent growth compared to adjusted gross profit of $21.2 million in 2020.

The company said its adjusted EBITDA amounted to $25.6 million in the fourth quarter of 2021 compared to $765,000 for the fourth quarter of 2020.

With numbers like that, you would think Well, which trades on the Toronto Stock Exchange, would be impervious to the current downturn in technology stocks, but that’s not the case. At presstime, the digital healthcare company’s stock sat at $5.49, up from its 52-week low of $3.76, but not as strong as its 52-week high of $8.86.

Investors have shed Well’s stock because of expectations over a slow-down in growth, according to the financial newsletter The Motley Fool. Nonetheless, the latter said that Well’s “diverse telehealth offerings, a strong network of outpatient medical clinics, large addressable market, opportunistic acquisitions, strength in the U.S. business, and ability to deliver strong cash flows make it a solid investment at current levels.”

Of course, Well is far from the only tech company struggling on the public markets. Amidst sell-offs of technology stocks, Clio and Trulioo have both publicly declared that now is not the right time to take companies public.

A number of Canadian tech sector IPOs have so far produced dismal results, ​with The Globe and Mail reporting that the average return for a tech sector IPO in the past year is minus 2.4 percent compared to 16 percent for the average stock market.

Despite market headwinds, Hamed Shahbazi, CEO and founder of Well, called 2021 a transformational year for the company because of the completion of a number of substantial acquisitions. Those included health services company CRH Medical for $373 million CAD, and Ontario Health Services provider MyHealth for $266.3 million.

“We have added significant scale to our business and increased our leadership position as the prominent end-to-end healthcare company in Canada,” he told investors. “Also, Well is a profitable business that is generating significant free cash flow to fund its organic and in-organic growth.”

Well attributed its strong growth to its acquisitions over the past year and organic growth.

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A couple of other Well acquisitions have also helped drive the company’s revenues. Well took a majority stake in United States-based telehealth provider Circle Medical Technologies in 2020, and the next year acquired a majority stake in US-based digital pharmacy startup Wisp.

The company noted that in the US, the combined annualized run-rate revenue of Circle Medical and Wisp is better than $99.7 million CAD based on preliminary March volumes. Well said it expects the combined run-rate revenue to exceed $124.7 million CAD later this year.

Among the year’s achievements, Well counted the acquisition of electronic record manager startup AwareMD for $4.5 million CAD; and the acquisition of digital patient engagement startup CognisantMD for approximately $17.6 million CAD, with an additional performance-based earn-out of up to approximately $7 million.

The company also raised $70 million from a bought deal offering of convertible debentures in November 2021. Well revealed that it plans to raise up to $500 million in capital through the sale of common shares, warrants, subscription receipts, units, debt securities, or share purchase contracts in one or more transactions over the next 20 months.

Well intends to use the net proceeds from any associated offerings to fund its growth initiatives, including future acquisitions of companies, technologies, intellectual property, or other assets, and to finance general corporate and working capital requirements, repay debts, or support other corporate purposes.

Well offers a healthcare practitioner enablement platform that includes tools for digital patient engagement, electronic medical records (EMR), revenue cycle management, and data protection services. Well also claims to own and operate Canada’s largest network of outpatient medical clinics.

Feature image courtesy of Well Health.

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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